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Consumer inflation in Oct exceeds NBU forecast

Consumer inflation in October 2021 slowed to 10.9% year on year, while remaining above the National Bank's forecast.

That’s according to the NBU’s October inflation report released by the regulator’s press service, seen by Ukrinform.

"Actual consumer inflation has slowed as expected, while standing slightly higher than the forecast published in the Inflation Report for October 2021. This is primarily due to significant side effects of rising energy prices," the statement said.

The National Bank notes, referring to the data published by the State Statistics Service, October’s consumer inflation slowed to 10.9% year on year (from 11% in September). In monthly terms, prices rose 0.9%.

Core inflation in October accelerated to 7.6% y-o-y (from 7.4% y-o-y in September).

Further growth of price rates for processed non-grocery products increased (to 13.2% y-o-y). The rise in prices for pasta, bakery and dairy products has paced up amid high energy prices. Cereal prices rose faster, including due to trade restrictions imposed by Russia. At the same time, the pace of sunflower oil price rise slowed down rapidly due to the exhaustion of the low comparison base effects and the launch of the new crop processing campaign.

The growth rate of the cost of services also accelerated (to 9.6% y-o-y). Due to the increase in production costs of businesses, more expensive became the services of fast food establishments, restaurants, car insurance firms, hairdressers, beauty salons, art and leisure establishments. The cheapening of the tourist services cost has slowed down.

Non-food prices also rose slightly (by 1.5% y-o-y). The growth rate of prices for pharmaceuticals and personal hygiene products accelerated. At the same time, the fall in prices for motor vehicles, as well as for clothing and footwear, deepened due to the hryvnia strengthening.

Meanwhile, the pace of the raw food price rise decreased (to 13.8% y-o-y).

Read also: Inflation to slow to 9.6% at year-end – NBU

The rise in sugar prices has slowed sharply due to the high yield of sugar beets. The growth rate of egg prices declined as well. Fruits became cheaper due to the high yield of apples and the hryvnia beef-up. At the same time, milk and meat prices rose further due to the unfavorable situation in livestock production and high energy prices. The latter factor was also reflected in the rise in vegetable prices due to higher costs of greenhouse products.

It is noted that in October the growth of government-regulated prices continued to slow down (to 16% y-o-y).

Further, the growth rate of natural gas prices for the households declined sharply due to the exhaustion of the low comparison base effect and that of the annual fixed-term contracts. Prices of central heating services rose slower as tariffs for households were kept intact. While the growth rate of tobacco prices decreased, prices for alcohol and transportation services continued their ascent.

Meanwhile, fuel prices accelerated (to 33.9% y-o-y). This is primarily due to the rise in oil prices in global commodity markets. The price growth for this group of goods was somewhat restrained by the government regulation on the fuel market, introduced in May 2021.

Read also: Consumer prices grow by 1.2% in Sept 2021 – State Statistics Service

As Ukrinform reported, according to the NBU outlook, inflation will slow down and stand at 9.6% by the end of 2021. In 2022, it will drop to the 5% target and remain around this level in the future.

The Ministry of Finance estimates that inflation as of the end of 2021 should not exceed 10%.

im

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